With Egypt now Africa's #1 remittance recipient, diaspora investment is the next move every government is considering

Yesterday’s brief covered the bft analysis on diaspora bond design — why Nigeria’s 2017 issuance succeeded and Ghana’s earlier attempts did not. The signal underneath that analysis is that several African governments are now seriously evaluating diaspora bond programs as the formal-investment counterpart to consumption-based remittance flows.

With Egypt overtaking Nigeria as the largest remittance recipient and Ghana’s 91 percent year-over-year remittance surge, the political logic for diaspora-investment instruments has intensified. Governments that previously saw remittances as private family transactions are now seeing them as the largest external funding source for their economies. The instinct — channel some of that flow into productive investment — is correct. The execution remains hard.

Watch over the next 18 months: Kenya (whose previous 12 percent domestic infrastructure bond failed on nationality restrictions and high minimums); Ghana (whose 91 percent surge gives the government political cover to attempt another diaspora issuance); Egypt (which has the volume but has not yet tried the instrument); Nigeria (which has the only fully-subscribed precedent and may attempt to repeat); and the East African Community as a regional issuer (which has been quietly discussed).

For African diasporans abroad: the policy windows are open right now. If you have ever wanted to invest in your country of origin beyond family-support remittances, this is the eighteen months when the infrastructure gets built. Diaspora organizations in London, New York, Toronto, and Hamburg are now in active consultation with various ministries. The terms get set by who shows up.

Refer to yesterday’s evaluation checklist before committing to any specific instrument.